In a HR meeting, an issue was raised by one of the member about impact of outsourcing HR activities on internal HR practices of an organisation. Some opine that Outsourcing may even cause a threat for the very existence of core HR dept. and HR personnel in the Company. Then what will HR professionals do...???

In my opinion, there are two ways of looking at the whole issue.

When viewed from a practical/ working part of HR activities (PA, R&S, Compn.,T&D, etc) it is like a nightmare for any HR personnel. If all the activities slowly get outsourced, then why is HR person required and what will he/ she do..? If he/ she exists also, his/ her work will be more of administration of activities than actual performance of core activities.

But when viewed from soft part of HR activities (Motivation, Attitudinal change, handling employee grievances, personalising company value systems in each employee, etc) HR person has got a lot to do in here. According to me, these activities can never be Outsourced. HRMs should be involved in high level strategic decision-making. Our existence should be made felt in the organisation. Here is the importance of HRM. We can work on generating new modules of HR practices to motivate and increase the productivity of organisations.

I have given a very small view as per my understanding. I request the group to carry on this discussion and generate more insights and perspectives. All comments are welcome.

I dont intend to hurt anyone's feelings or thoughts. Lets keep this discussion on.

Bindu

Dear bindu & colleagues,

Here goes my contribution, we are researching on this front at the moment, trying to define, How HR's role is morphing with changing organisational scenario ?. Excerpts from some research papers on the area:

The Present Scenario
**************************
Never before has there been a greater respectability associated with the discussion of HR issues. HR now is a CEO/chairman’s issue. Key topics for the next decade are:
• Attraction and retention of talent (including leadership development)
• Workforce planning and skills/competency assessment
• Utilization of technology
• Globalization
• Customer satisfaction and its relationship to employee satisfaction
• Strategic alignment and operational efficiency in the operation of HR; including the ability to measure its impact on business results, i.e., measurements of “soft” issues in addition to cost measurement.

Underscoring these challenges is a key objective for HR to express its value added in terms of economic consequences to a business.

The Prediction
*******************
There are two HR “strongholds” that will change dramatically over the next decade. The first is administrative/transactional work. This work will be done through increasingly efficient technology, which may or may not reside in HR. The second area (driven by such technology deployment) is the notion that, in the future, HR will no longer be a place. HR at the desktop will cause HR professionals to truly understand the differences between the manager as customer and the employee as customer.

The general direction is for HR to show the way to enable managers to manage HR. Day to Day operational HR issues will be managed by efficient technology and / or managers. This leaves a much greater challenge for the HR professional—how to be an effective business advisor. Future HR professionals must understand different business models and the profit engines of their employers and how these are affected by a wide range of people and organizational dynamics.

The trend is certainly toward outsourcing. Today, most outsourcing arrangements are administrative in nature; but this is changing rapidly. There are now viable alternatives for outsourced HR expertise, such as compensation, training or recruiting. There also is the option of totally outsourcing HR. Each company will need to determine its own optimal mix of what is outsourced and what remains in-house. However, the economics of outsourcing will prevail in the market. When a company looks at delivering HR service internally vs. an outsourcing arrangement—outsourcing will always win on a pure cost basis. However the transactional part is safer & easier to outsource, whereas the cognitive part of HR is recommended to be maintained in-house.

So what will HR Professionals do then?
*************************************************

The most powerful opportunity for HR professionals is to develop the strategies that can build a company’s brand through its people. When you think about it, there is nothing that can’t be copied—whether technology, product or strategy. The only thing that can differentiate Company A from Company B is a common set of values delivered through people. People will become the critical differentiator.

Currently, most companies rely on advertising to build a brand, viewing the branding process as an ad campaign. There are big budgets available to create more and slicker ads.But you can’t measure the results from advertising. There is no proof that advertising makes customers more loyal or has an impact on behavior. However, there is a proven link between employee satisfaction and customer satisfaction. People have a greater impact on customer loyalty than advertising. Imagine if HR was given the company’s advertising budget to spend on people. It could help create a corporate culture where people understand the company’s values and begin to behave in a way that builds customer satisfaction and loyalty.HR plays a key role in both helping the organization to select the right people and providing the flexible kind of environment in which they can thrive.

Final Thoughts
**********************

HR will not disappear, but it will be recast. There will be great opportunities for great people. Most likely, HR will migrate to
the line, with a drive to put more HR activities in direct control of the line.

HR is, and will remain, one of the glues that ensure that the enterprise can operate as a cohesive whole. The line of sight should be focused on assisting the function in understanding, managing and improving the “business” of HR. This has everything to do with the profession attracting individuals who have the capacity to understand business, to think conceptually and strategically, and to express themselves as business people. Where HR cannot deliver at this level, the function could be in danger of having its influence significantly reduced to something less than a true business partner.

For the group to add more.

Warm Regards

Meera

Hello,

I would agree to your view, For some CEOs, inviting the HR director to participate in strategy sessions may sound weird. But HR's understanding of business was the reason behind it, In the past when HR was invited to business development meetings, they pointed out your new great growth plan would violate ACT this or Title that!!.

To get the executive management confidence HR must project that it understands what real business is. As you have pointed out they must know nukes and corners of various product / service offerings.

One way HR professionals can demonstrate their grasp of the big picture is to immerse themselves in the technical and financial operations of their companies. They need to talk to senior management about turnover issues, revenue, shareholder value, the impediments to revenue growth, the human resources needed to take advantage of the current market. You’ll be able to convince them that you belong at the strategy table.

For their part, many HR professionals remain uncomfortable with such issues, where they may have little experience. They need to understand the business issues and to be seen by the executive team as people who know the business. The HR person must ask a lot of questions — What’s the next direction for the company, what products are in the pipeline, where will financing come from? What is the talent pool required to exploit this opportunity ?— and understand all of it.

Sometimes HR people are a little intimidated by the math and finances, so they’re not viewed as wanting to understand that part of the business. HR people need to have confidence in themselves. If they feel like second-class citizens, they’ll accept that status and its lower salaries, then they won’t sit at the strategy table.

To put in simple words, the HR professional of today must be knee-deep in multiple disciplines, to reach the strategy table. It is a frightening prospect, but that is the need of the hour.

Thanks and Regards

kaushik